U.S. crude oil futures rallied to close slightly higher Monday, as investors weighed the prospects of a possible pipeline flow reversal earlier than planned, while demand concerns eased as talks on the Iranian nuclear program progressed. Oil prices had earlier dropped following concerns over the eurozone sovereign debt problems, but rallied after some upbeat retail data from the U.S.
Light Sweet Crude Oil futures for May delivery, gained $0.10 or 0.1 percent to close at $102.93 a barrel on the New York Mercantile Exchange Monday.
Crude prices scaled a high of $103.37 a barrel intraday and a low of $101.80.
Last week, oil ended almost flat, impacted by some soft economic data from China that raised concerns of demand growth. The Chinese economy expanded at the weakest pace in nearly three years in the first quarter of 2012. As well, a report earlier last week revealed that China unexpectedly swung to a trade surplus in March.
Oil prices found support after news reports of Enbridge Inc. and Enterprise Products Partners that own the Seaway pipeline have requested authorities to permit the pipeline flow reversal by mid-May, instead of the earlier start date of mid-July. The pipeline is estimated to transport nearly 150,000 barrels of oil a day from the Midwest to the Gulf of Mexico, which would also ease supply congestion at Cushing, Oklahoma.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 79.763 on Monday, down from 79.828 in North American trade late Friday. The dollar scaled a high of 80.18 intraday, with a low of 79.74.
The euro was trading slightly higher against the dollar at $1.3089 on Monday, as compared to $1.3086 late Friday. The euro had scaled a high of $1.3146 intraday with a low of $1.2996. This was the lowest the euro traded since late January.
From the U.S, the Commerce Department's initial estimates indicate total U.S. retail sales at a seasonally adjusted level of $411.1 billion for March, which is an increase of 0.8 percent over February. And while February's retail figures were revised down slightly to show 1 percent growth rather than the 1.1 percent initially reported, the March sales levels came in significantly higher than the 0.3 percent growth predicted by most economists.
Homebuilder confidence in the U.S. showed an unexpected decline in the month of April, according to a National Association of Home Builders report on Monday, The decrease marks the first drop in seven months. The NAHB/Wells Fargo Housing Market Index dropped to 25 in April from 28 in March, while economists expected the index to edge up to 29.
The New York Fed said its general business conditions index plunged to 6.6 in April from 20.2 in March, with a positive reading indicative of an increase in manufacturing activity. Economists expected the index to edge down to 18.0.
The eurozone trade balance moved to a surplus in February, but was lower than forecast by economists, data from Eurostat showed. The trade surplus amounted to 2.8 billion euro in February compared to revised 7.9 billion euro deficit in January. Economists expected a surplus of 3 billion euro. In February last year, the balance was in a deficit of 2.8 billion euro.
Also from the eurozone, Spain's ten-year borrowing costs increased above crucial 6 percent mark on Monday, to 6.15 percent, the highest level since December 2011. Borrowing costs near 7 percent are seen as unsustainable, and in the past, countries were forced to seek a bailout.
The cost of insuring Spain's debt hit a record high with the five-year credit default swaps reportedly rising above 510 basis points. The Spanish Treasury is set to auction 12- and 18-month bills tomorrow, and 2- and 10-year bonds on April 19.
Italian bond yield also moved higher on Monday driven by the concerns over Spain. Meanwhile, the yield on the German 10-year bund hit a record low of 1.628 percent as investors flocked to safe-haven debt.
On focus will be on the crude oil inventories data from the API due Tuesday and the EIA report on Wednesday.
by RTT Staff Writer
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